Pick Your Poison – Violate State or Federal Law? Court Finds That Complying with State Law On Employee Criminal Background Checks Is Not a Defense to a Title VII Disparate Impact Claim

I present on the topic of background checks often, and when it comes to Q&A time, I almost always get the question (or some variation of it): "How does Title VII come into play when an employer has state law requirements regarding criminal background checks?" In Waldon v. Cincinnati Public Schools, No. 1:12-CV-00677 (S.D. Ohio Apr. 23, 2013), the Southern District of Ohio shed some light on this particular employer predicament and demonstrates the potential for employment discrimination liability for employers who have overly broad exclusionary hiring policies based on past criminal conduct, even when those policies are required by state law.

In 2007, the Ohio legislature amended a state law to require criminal background checks of all current public school employees, including those not responsible for the care, custody, or control of children. (HB 190, eff. Nov. 14, 2007) According to the law, if an employee had been convicted of any of a number of specified crimes, no matter how far in the past they occurred, nor how little they related to the employee’s present qualifications, the law required the employer to terminate the employee.

To comply with the law, in 2008 the Cincinnati Public Schools terminated 10 employees with criminal convictions, nine of which were African American. Two of those nine, Gregory Waldon, who was found guilty of felonious assault in 1979 and incarcerated for two years, and Eartha Britton, who was convicted in 1983 of acting as a go-between in a $5.00 marijuana deal, sued the school district alleging that the state law had a racially discriminatory impact on African Americans contrary to Title VII and comparable Ohio state law.

The Defendant filed a motion to dismiss asking the court to throw out Plaintiffs’ suit claiming it simply followed Ohio law when it terminated their employment. The Defendant contended it maintained no particular employment practice that caused a disparate impact, and that it was a business necessity for it to follow Ohio law and that to force it to litigate the suit would force it to defend a criminal records policy it had no role in creating.

The terminated employees argued that Title VII trumps state law, such that their terminations were "unlawful employment practices" based on disparate impact" and that compliance with the state law was no defense because a violation is a violation. In Plaintiffs’ view, "whether Defendant was complying in good faith to state law goes to the remedy the Court should ultimately craft, and not to whether the terminations were in violation of Title VII."

The court found that Plaintiff "adequately plead[ed] a case of disparate impact" and that there was "no question that Defendant did not intend to discriminate"; however, the court went on to note that "intent is irrelevant" in a disparate impact case and the practice it "implemented had a greater impact of African-Americans than others."

The biggest issue on briefing was whether Plaintiffs could even attack Defendant’s facially-neutral policy based on the state law mandate. The court rejected "Defendant’s view that the state law must ‘purport’ to discrimination in order to be trumped by Title VII. Such a view would gut the purpose of Title VII …." Quoting Title VII, the court went on to note that an employer may defend against a prima facie showing of disparate impact only by showing that the challenged practice is "job related for the position in question and consistent with business necessity".

While the court noted that the policy at issue was a "close call," the court went on to note that the Defendant’s failure to take into consideration any reason why the policy should not be applied to excluded individuals resulted in a disparate impact:

Obviously the policy as applied to serious recent crimes addressed a level of risk the Defendant was justified in managing due to the nature of its employees’ proximity to children. However, in relation to the two Plaintiffs in this case, the policy operated to bar employment when their offenses were remote in time, when Plaintiff Britton’s offense was unsubstantial, and when both had demonstrated decades of good performance. These Plaintiffs posed no obvious risk due to their past convictions, but rather, were valuable and respected employees, who merited a second chance. "To deny job opportunities to these individuals because of some conduct which may be remote in time or does not significantly bear upon the particular job requirements is an unnecessarily harsh and unjust burden." Buck Green, 523 F.2d [1290,] 1298 [8th Cir. 1975]. Under these circumstances, the Court cannot conclude as a matter of law that Defendants’ policy constituted a business necessity.

Basically, the court concluded that once the school district saw that nine of the ten employees being fired were African American, it did not have to follow the state law because Title VII trumps state mandates, and went on to provide that, instead of just following the state law mandate, the school district should have raised questions with the state board of education regarding the disparity: "The Court cannot conclude that Defendant was compelled to implement the policy, when it saw that nine of the ten it was terminating were African-American. … Title VII trumps state mandates, and Defendant could have raised questions with the state board of education regarding the stark disparity it confronted." While the court did not go into any further detail, it appears that the court presumed the Defendant could have asked the board of education whether it was okay to apply a state law it believed would have a disparate impact. Upon review of the law, however, there does not appear to be any language that gives an employer any right or ability not to follow the law with the permission of a school board. Not to mention, whether Defendant could have appealed to the school board or whether the board of education could have or would have done anything counter to the state mandate is another question, and one not addressed by the court or in the parties’ briefs. Essentially, according to the court, the school district could not show that Plaintiffs posed an obvious risk to school children based on their past convictions and therefore could not establish a “business necessity.” The case remains pending.

Takeaways: Talk about being in a tough spot … this case should be titled Rock v. Hard Place! Does an employer violate state law or violate Title VII? Obviously, this case leaves more questions than it answers and should serve as a big wake-up call for employers. The result is particularly harsh for employers in certain industries, e.g., education, childcare, healthcare, transportation, finance, that are required by state law to conduct employee criminal history checks because those employers cannot use state law as a defense to ignore Title VII or (and even though the Waldon court did not cite to it) the EEOC’s Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions under Title VII, which became effective April 24, 2012 ("Enforcement Guidance"). The EEOC made clear in its Enforcement Guidance that state law regarding the use of criminal histories in employment may be pre-empted by Title VII. The obvious problem is what employers are to do when state laws require them to conduct criminal background searches for certain positions and keeps them from hiring employees who are unable to pass a screen? As this case demonstrates and reminds employers that, unlike federal laws or regulations, state and local laws are preempted by Title VII if they “purport[] to require or permit the doing of any act which would be an unlawful employment practice” under Title VII.

As such, if an employer’s policy on criminal background checks is not job related and consistent with business necessity in conformity, even if the employer complies with the state law, that same policy may violate Title VII if it has a discriminatory impact. In other words, compliance with a state or law cannot be used as a defense to Title VII liability. To minimize the risk of disparate impact liability, employers should:

Avoid policies excluding individuals from employment based on any criminal conviction.

In cases where an employer has an exclusionary policy, including those mandated by state or local law or regulation, make sure that it is narrowly tailored and focuses on criminal convictions that are relevant to the nature of the employment at issue.

Before using an exclusionary policy, no matter how tailored, to exclude an applicant or employee from an employment opportunity, conduct an individualized assessment of the employee’s (or applicant’s) actual fitness for the job in question, considering such factors as: the facts or circumstances surrounding the offense or conduct; the number of offenses for which the individual was convicted; older age at the time of conviction, or release from prison; evidence that the individual performed the same type of work, post conviction, with the same or a different employer, with no known incidents of criminal conduct; the length and consistency of employment history before and after the offense or conduct; rehabilitation efforts, e.g., education/training; employment or character references and any other information regarding fitness for the particular position; and whether the individual is bonded under a federal, state, or local bonding program.

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